The Security and Exchange Board of India (SEBI) clarified that the term ‘level’ used in SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 refers to the position of the Compliance Officer in the organization structure of the listed entity.
The capital market regulator explained that ‘one level below the board of directors’ means one-level below the Managing Director or Whole-time Director(s) who are part of the Board of Directors of the listed entity. The interpretation is in line with regulation 2(1)(o) of the LODR Regulations read with section 2(51) of the Companies Act, 2013.
In case a listed entity does not have a Managing Director or a Whole-Time Director, then the Compliance Officer shall not be more than one level below the Chief Executive Officer or Manager or any other person heading the day-to-day affairs of the listed entity.
Florra K Das, Head of Legal – APAC Counsel & Compliance Officer, Carestream Dental on this development said, “Compliance Officer should always report to MD and in line with CEO’s purview in order to grasp market insights which is much needed in the current diversified industry. This position should always be near the top leadership which ensures they are well-acquainted with the company’s operational nuances, corporate strategies, and any emerging risks.”
“The overall aim is to align compliance efforts with business operations while ensuring that organizations adhere to legal and ethical standards, ultimately protecting shareholders, investors, and other stakeholders,” she added.
The clarification is in the backdrop of queries SEBI received seeking clarity on the term ‘level’ used in regulation 6(1) of the LODR Regulations, which required the Compliance Officer of a listed entity to be in whole-time employment of the listed entity, not more than one level below the board of directors, and designated as a Key Managerial Personnel.
The provision was inserted through the SEBI (Listing Obligations and Disclosure Requirements) (Third Amendment Regulations), 2024, dated December 12, 2024.
